Jason J. Fichtner

The Hidden Costs of Tax Compliance

Lawmakers have long used the tax code for purposes far beyond simply collecting revenue to fund the federal government. Through the insertion of specialized tax provisions, the tax code is used to achieve policy and political aims as well. But these special provisions come at a price: economic growth is foregone, higher accounting costs are incurred, more lobbyists are hired to protect tax advantages, and revenue is lost as a result of collection inefficiencies. We estimate that hidden costs of tax compliance range from

A Guide To Tax Policy Analysis: The Central Tendency of Federal Income Tax Liabilities In Distributional Analysis

215 billion to

Enhancing U.S. Retirement Security through Coordinated Reform of Social Security Disability and Retirement Insurance Programs

987 billion annually, and that part of the

Reforming the Mortgage Interest Deduction

452 billion revenue gap in 2012 unreported taxes was the result of tax code complexity. We provide policy recommendations based on lessons from the Russia flat tax reforms and the Tax Reform Act of 1986.

Lessons from the 1986 Tax Reform Act: What Policy Makers Need to Learn to Avoid the Mistakes of the Past

The analysis of tax data is a time intensive and complicated process. Much time and effort are spent collecting income and tax data, compiling data sets and running statistical analyses. However, it appears that relatively little time and effort are spent actually understanding the data and how best to present results to the public of analyses of using tax data. This is evident in the overuse of averages and the simplistic classification of taxpayers into income ranges and quintiles by tax distribution tables that are often highly publicized. This study shows that the link between income and tax liability is much more tenuous that that often presumed and that a variety of other factors can greatly affect tax liability. Specifically, this report finds that, among other things: - Over 22 percent of all 1995 tax returns claimed zero tax liability - For calendar year 2000, the JCT estimates that 48.7 million out of 140.2 million taxpayers overall will have zero or negative federal income tax liability. - In four out of the five income groups examined, a majority of taxpayers had tax liabilities that were either 25 percent greater than the average or 25 percent less than the average tax liability for each income group. - In comparing federal income tax liabilities, distribution tables often misclassify and group millions of taxpayers into quintiles in which they have little tax liability in common. - Approximately 2.2 million taxpayers in the third quintile pay more in federal income taxes than 5.4 million taxpayers classified in the fourth quintile. - Over 3 million taxpayers in the fourth quintile pay more in federal income taxes than 4.1 million taxpayers classified in the fifth quintile.

The Misleading Effects of Averages in Tax Distribution Analysis

Many Social Security reform proposals have emphasized the role of savings over insurance, focusing on security in retirement. In contrast, disability in prime working age is harder to save for and thus is arguably better considered an insurable event. However, unlike determination processes for many other catastrophes, disability determination often appears inherently relative and somewhat subjective. For these reasons, most social insurance reform proposals have advocated treating the reform of disability insurance separately, subsequent to any reform of the retirement system. This article focuses on disability insurance but makes the case for considering reforms made in tandem—that is, both developing disability program reforms that accommodate plausible retirement program reforms while properly aligning incentives to support work and savings and providing a financially secure, vital safety net for disabled Americans.

Providing Tax Equity for Mutual Fund Investors: Changing the Taxation of Capital Gain Distributions

The

A Comparison of Tax Distribution Tables: How Missing or Incomplete Information Distorts Perspectives

69 billion mortgage interest deduction (MID) is often viewed as an element of the tax code that promotes middle-class prosperity. However, 64 percent of the benefits, as measured by effective tax reduction, goes to households earning more than

Extending the Budget Enforcement Act: Revision of PAYGO Rules Necessary for Better Tax Policy

100,000 per year. The large variation in nominal benefits is one of the reasons why many economists state that the MID is regressive. High-income earners average a tax benefit nearly nine times greater than a tax filer earning

Encouraging Personal Saving and Investment: Changing the Tax Treatment of Unrealized Capital Gains

50,000-